Despite Inflationary Pressure, Nigerian Insurance Industry’s GPI Hits N700bn In 2022

The Nigerian insurance industry’s estimated gross premium income (GPI) maintained its double-digit growth trend and crossed the N700 billion mark in full year, 2022, despite inflationary pressure.

This was stated by Agusto & Co. Limited in its 2023 insurance industry report. The 2023 edition of the annual report provides a comprehensive review of the insurance landscape in Nigeria and the near-term expectation for the industry.

According to the report, the uptick in the Industry’s premium was driven by several factors including improved economic activities and stronger regulatory support.

“Notwithstanding, inflationary pressures continue to adversely impact claim settlements, underwriting costs, operating expenses and also moderate profitability indices,” it stated.

Agusto & Co. recognised that the country’s insecurity gaps, infrastructural shocks and aftermath of the#EndSARS protest have emphasised the benefits of insurance products, particularly, fire and general accident policies.

It stated that “one of the most notable highlights of the Industry in 2022 was the increase in third-party motor insurance policy rates by the National Insurance Commission (NAICOM), the apex regulator, on 22 December 2022.”

The rating agency stated that Nigeria’s political environment will define the financial year 2023 for insurance operators, saying, “the first half of 2023 would be characterised by electioneering activities while the second half would bring a new administration and fresh ideas for fiscal and economic transformation.”

In the near term, Agusto & Co. expected the introduction of a risk-based capital regime to gain momentum, while NAICOM continues to implement policies and directives that would boost the Industry’s sustainability.

It added that the non-conventional takaful insurance segment, which is an under-tapped area, is already witnessing significant growth as evidenced by the marked 172 per cent growth in GPI in full year, 2021,  anticipating that the segment would continue on its upward trajectory in the near term.

It stated that takaful insurers offer alternatives to conventional insurance and their model is based on the concept of social solidarity, cooperation and mutual indemnification of losses of members.

Agusto & Co believes these alternative insurers would continue to leverage the large Muslim population in Nigeria estimated at over 100 million to grow the segment.

Also, Agusto & Co. expected a modest performance by the Industry in full year 2023, supported by the rising yield environment.

“Initiatives such as the bancassurance model, which would enable insurance operators to partner with the banking industry to deepen their reach in the retail market will also bolster the Industry in our view.

“The rate hikes for third-party motor insurance and the bullish growth track for micro insurance, takaful insurance and some new entrants in the conventional insurance landscape are also growth drivers for the Industry.

“Furthermore, the intensified marketing campaigns, awareness programmes and adoption of digital channels would continue to support penetration, albeit strong broker relationships would remain vital in bolstering performance,” the report pointed out.